Grayscale has announced a legal challenge to the US Securities and Exchange Commission’s recent rejection of its application to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin cash exchange-traded fund (ETF).
He announced that his chief legal strategist, former United States Attorney General and partner at Munger, Tolles Olson, Donald B. Verrilli, Jr., had filed a petition for review with the United States Court of Appeals for the District Circuit of Columbia.
According to a June 29 statement from the Securities and Exchange Commission, the motion was rejected “to protect investors and the public interest” because the proposal failed to explain how it “is intended to prevent fraudulent acts and practices and manipulation.”
A similar decision was also made regarding Bitwise’s exchange-traded product (ETP) on Wednesday, citing the same reasons.
Grayscale Investments, which has $12.92 billion in assets under management at its GBTC, has been awaiting a decision from the SEC to convert its flagship Bitcoin trust into a spot ETF since filing with regulators on Oct. 19, 2021 .
The decision will be made a week before the July 6 deadline.
Earlier this month, Grayscale announced that it had hired a former United States Attorney General, Donald B. Verrilli Jr., to prepare for a possible litigation with the SEC over its filing if it were denied.
Additional counsel on Grayscale’s legal team are Davis Polk Wardwell LLP and their in-house counsel, including Craig Salm, who is currently General Counsel.
In March, Grayscale CEO Michael Sonnenshein told Bloomberg that his company would consider filing a lawsuit under the Administrative Procedures Act (APA) if the Financial Regulator denied his Bitcoin cash ETF application.
On Wednesday, James Seyffart, an ETF analyst at Bloomberg Intelligence, told his 19,400 Twitter followers that the SEC’s decision on both ETFs came sooner than he thought, but both were expected.
Oh well. There it is. Certainly sooner than I expected, but the decision was as expected. BOTH @ Grayscale‘s $GBTC and @BitwiseInvest‘s place #Bitcoin ETFs were “rejected” by the SEC today. https://t.co/9w8ouQuSfk pic.twitter.com/Irrrwznr5T
— James Seyffart (@JSeyff) June 30, 2022
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